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ECON203-LAB4-Q8 - Question 3[14 points A simple...

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Unformatted text preview: Question 3 [14 points] A simple mao'necnnomit: system is described below Assuming the system lollows the aggregate expende model, please answer the questior‘s that follow. C = consumption expenditure Co = autonomous consumption expenditure 5 = marginal propensity to oonsu me (M PG) Yd = disposable lncome NT = net taxes I = tax rate In = investment expenditure G“ = government expenditure X - exports IM mports IMO = autonomous imports rn = marginal propemityto import (MF'M) Y = real GDPfin-me a) Calculate the equilibrium level otincnme. Keep as much precision as possible during your talculatiens. Your final arswer should be accurate to the nearest dollar. Equilibrium = 52,023 b] What is the multiplier for government expenditures? Thai is, increasing govemment expenditures by $1 increases the equilibrium level of lnccme by how much? Keep much preclsion as possible during your calwlalions. Your final answer should be acou rate to at least two decimal places Government Multipller = 2.32 a) Suppose that the potential income for this economy is 53,31 3. What change in government spending would ellrninane this gap and bring the economy back to equllibrl urn? Keep as mud! precision as posslble during your calculations. Your final answer should be accurate to the nearest dollar: Govemmenl Change = $ 55 Marklnn: ...
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